Earnings call transcript: Abacus Life Q4 2024 sees robust revenue growth

Abacus Life Inc (ABL) delivered a strong performance in Q4 2024, reporting revenues of $86 million, buoyed by strategic acquisitions and a focus on diversification. The company’s stock closed at $7.14, down 30.7% over the past six months and currently trading near its 52-week low of $6.75. According to InvestingPro analysis, ABL appears undervalued based on its Fair Value calculation, despite recent market pressure. It’s worth noting that the company’s dividend announcement requires clarification, as InvestingPro data indicates ABL does not currently pay dividends to shareholders.

Key Takeaways

• Revenue for Q4 2024 reached $86 million, driven by strategic acquisitions.
• EBIT stood at $3.1 million, with a margin of 3.6%.
• Dividend increased from 0.4 to 0.45 per share, totaling £9.7 million for the year.
• The company is diversifying into renewable energy, including onshore wind and solar.

Company Performance

Abacus Life’s performance in Q4 2024 was marked by significant revenue growth, largely due to the acquisition of Ross Offshore. The company is strategically positioning itself in the renewable energy sector, expanding its focus from offshore to onshore wind, solar, and battery technologies. Despite a volatile oil and gas market, the company maintained a strong presence, particularly in regions like Australia, Brazil, and the North Sea.

Financial Highlights

• Revenue: $86 million, driven by acquisitions.
• EBIT: $3.1 million with a 3.6% margin.
• Net Cash Position: $4.8 million.
• Dividend: Increased from 0.4 to 0.45 per share.

Outlook & Guidance

Abacus Life is optimistic about its future prospects, targeting a 6.5% EBIT margin through the business cycle. The company expects its ABL segment to return to 20% margins and anticipates a recovery in the offshore wind market in the second half of 2025. Forward EPS forecasts for FY2025 range from $0.13 in Q1 to $0.22 in Q4, with revenue projections reaching $178.55 million by FY2025.

Executive Commentary

Ruben Siegel, Group CEO, highlighted the challenges and opportunities faced by Abacus Life: "2024 for ABL Group was a mixed bag between a very volatile oil and gas market, between a decline in the offshore wind market." He emphasized the company’s commitment to acquisitions as a growth strategy: "We continue to look for acquisitions. We continue to look for the ability to buy more companies."

Risks and Challenges

• Volatility in the oil and gas market could impact revenue stability.
• The offshore wind market’s current downturn poses a short-term challenge.
• Integration of new acquisitions requires careful management to realize synergies.
• Macroeconomic factors, including potential recessions, could affect market demand.

Q&A

During the earnings call, analysts inquired about the margin decline in the ABL segment, which was attributed to recruitment and utilization challenges. The company’s acquisition strategy was also scrutinized, with management defending it as a mechanism for long-term growth. Cost optimization and operational efficiency remain top priorities for Abacus Life as it navigates a complex market environment.

Full transcript - Abacus Life Inc (ABL) Q4 2024:

Ruben Siegel, Group CEO, ABL Group: Okay. Good morning, everyone. Welcome. It’s good to see everybody again. Today, I’m delighted to announce our Q4 results 2024.

My name is Ruben Siegel. I’m the Group CEO, and I’m also joined this morning by David Jackson, the Group CFO. So as I said, I’m going to give you a quick overview of this typical, our usual schedule format. I’m gonna give you a quick overview of how Q4 played out and also the rest of 2024. And then I’m going to hand across to Stuart, who’s going to give you more details on our financials and and how the quarter played, in terms of cash and EBIT and so on and so forth.

And then I will wrap up with a summary and how we see things going forward in our various markets. As usual, we draw your attention to the disclaimer. Please feel free to read this in your own time. So let’s jump into the results. Another mixed bag if we’re honest.

We had some low spots, we had some high spots. Overall we ended the quarter with $86,000,000 of revenues. That was predominantly driven over the previous year from the acquisition of Ross Offshore, which also came into the organization, which of course added more revenue. Saying that, if you remove the revenues from Ross Offshore, there was a slight increase organic growth across the organization. That was in different parts, while at the same time we had a decrease in revenues across OWC which you’ll see more details on in a moment.

So it was a mixed bag in terms of revenue growth. We had some down in the offshore wind, we had some up in the oil and gas, even that was quite different across the globe in terms of The Americas versus Asia and so on and so forth. So it was another mixed quarter, but overall revenue wise it was an okay end to the year. But Q4 kind of mirrored the rest of 2024 in terms of a very volatile market that we’re in. Some parts of the oil and gas side saw some good high points, also some low points and also we saw offshore wind being very much pushed to the right hand side.

So Q4 ended the same way really as the rest of 2024, although there are some bright spots which I’ll come on to a little bit later. In terms of the EBIT, a marginal increase over our Q2 figures. We closed the quarter at $3,100,000 with a margin of about 3.6%. Again, quite a mixed bag. We had offshore wind, which was down.

We also had a reduction in our utilization in the ABL segment of the organization, which of course brought some of the margins down. But saying that we had a very good results in both AGR and Longitude, which brought some of the margin back up. So the margin was kind of a bit like the rest of the business quite a mixed bag. But overall these were the results in terms of the EBIT and in terms of the revenues. In terms of the net cash position, we closed at $4,800,000 This is down over a quarter but that was also due to the payment of dividend during the quarter of just over $5,000,000 So there was an increase in the cash but obviously a decrease once you take out the dividend.

Finally, we also had a very active quarter in terms of M and A and in fact 2024 overall was quite active with M and A as we continued into 2025. We announced the acquisition of Hydromod, which I’ll talk about in a moment, and also the acquisition of Techconsult which we will actually close in Q2 this year. So it was quite active at the end and we’ll talk about that in a moment. But people are going to ask how do we see 2025 Because this is 2024, it’s gone by. It was a tricky year.

If I’m honest with you, there are things we should have done. Maybe there were some actions we should have taken earlier. I think we’ve said that in Q2. We have seen some of the lights coming through. Some of the actions that we took in particularly in Q3, Q2 and Q3 have started to flow through, and hence how do we see twenty twenty five?

And I think the answer is in our dividend. We agreed with the board yesterday that we would like to increase this dividend from 0.4 to 0.45 not per share. So that kind of gives you an indication of how we see things going forward, how we see our markets going forward, how we see our operations in view of the changes we made during 2024. So just talking very briefly before I hand across to Stuart, we did announce the acquisition of Proper Marine in Brazil in Rio De Janeiro. This was a company founded in 2010.

It’s a pure engineering place in marine operations, it’s in engineering design, it’s in consultancy and if some of you will remember the story of Longitude. It’s a part of our business that’s one of the smallest parts but highly profitable and we want to find ways to grow Longitude, continue to push our engineering services and Proper Marine was a perfect acquisition for us down in Rio De Janeiro. One of the hotspots in oil and gas is still in Brazil and I think they’re very, very well placed. We’ll talk more about Proper Marine as we move forward, but this acquisition was announced in Q4 and we closed it in the January. And last but not least is Techconsult.

So this is a little bit early. We’ve only announced it in Q1, so this has got nothing to do with our Q4 results, but it continues that growth with AGR. We had an opportunity to acquire Tech Consult. It brings another 200 professionals into the organization. It continues to take our push into here in Norway, and more into the resourcing.

So Tech Consult was announced in in February and the plan is to close Tech Consult in early April. So you’ll get to hear more about that when we do the Q1 results. So that’s the mix bag. I will come back and talk a little bit more a little bit later, but for now I’ll hand across to Stuart who will give you more detail on the financials.

David Jackson, Group CFO, ABL Group: Thank you, Ruben, and good morning, everybody. Before I go into the financials, let me just pick up on the acquisitions that we did more recently. So in terms of Proper Marine, an acquisition we closed in January of this year, so $4,000,000 in terms of purchase price. In terms of consideration for that, we paid half of that in cash and then half of that is coming through shares and those shares will be paid out over the next five years. This is part of the Longitude businesses, as Ruben has mentioned.

We had about $100,000 s of transaction costs associated with this. And obviously, our first point of consolidation for Prop and Ream will be the Q1 results we come back to in a couple of months’ time. And then in terms of tech consult, so an acquisition announced in February, we’ll actually close this probably in April, so consolidation from Q2 going forwards. Overall purchase price was $3,900,000 so $43,100,000 and the consideration here is predominantly cash, but also seller’s credit. So for a year, we’ve got $1,000,000 that we hold back and then pay in twelve months’ time after the closing.

So you’ll start to see those coming through in the Q1 and the Q2 results as we go into 2025. Going then back to the Q4 and the numbers, I guess this is just the snapshot we show in terms of the overall business. Couple of points to note, I guess, ATR is now sitting there from a revenue perspective as the largest part of the business because of the consolidation of Ross Offshore in Q4 as we had in Q3. It also has marine operations going through there, so I’ll come back to the impact of marine operations when I go through some of the details. But that makes the revenue, I guess, a bit more lumpy when we look at the AGR segment going forward.

As Ruben mentioned, from the ABL’s point of view, a bit of a downturn in terms of overall utilization during the quarter, so lower utilization there. We’ve also had some bad debt in that period, but I’ll come back to that when we go through the details. OWC is a roundabout break in for the quarter. They’ve taken some cost reduction measures during that quarter and will continue to do that through Q1 of twenty twenty five to manage the cost base relative to where the market is at present. And as we’ve indicated before, we don’t see an upturn in the market until the second half of twenty twenty five.

And then Longitude is the smallest part of the business, but lumpy in terms of project completion. So we have a very strong quarter here in terms of 34% EBIT margin during that quarter. Our corporate costs are about 6.6%, so that gives us 3.6% in terms of the overall EBIT margin in the quarter. And that’s comparable to 6% as the guidance through the cycle that we get to the market with the mix of businesses we have at present. Turning then to a bit more of the detail, dimension from an ABL perspective, lower utilization during the quarter, so that’s reflected in terms of where we are in terms of margin compared to this time of last year.

We also had 400,000 of bad debt in the ABL sector. Large part of that is attached to Pemex in Mexico. So our policy is that after we have a receivable outstanding for twelve months, we make a full provision. So we’ve taken that provision in Q4. We still do see with the unwinding of payments coming out of Pemex that we’ll start to recover that in hopefully in the first half of twenty twenty five.

And then with the lower utilization, I guess predominantly I’d focus around the Americas region, where during Q4 they’ve already taken actions to reduce their cost base. We should see the benefits of that as we come into 2025. From an OWC perspective, continued downturn in the market, we’ve been talking about now for probably four or five quarters. And as I mentioned, we don’t expect that to recover until the second half of twenty twenty five, although we have seen a bit of an uptick in terms of our tendering activities more recently. OWC, as I mentioned, has taken cost reduction measures through Q4 twenty twenty four and there will be further cost reduction measures as we come into 2025.

So hopefully we get that to position and returning to profitability before we see the recovery in the market. Longitude, as I mentioned, very strong performance during the quarter. But I think if you look at the bottom table with longitude here, you see in terms of the margin level, how lumpy that business can be dependent on when there are completions happening on the projects. So we’re at 34% this quarter, a couple of quarters before we were at 10%. So that’s the lumpiness of that business.

And finally, AGR, performing quite well. So we have the integration of Ross Offshore during this quarter. The underlying business that we had from AGR before Ross is performing well. From a Ross perspective, we’ve mentioned before, we also acquired their marine operations business. So this is where we’re chartering a vessel and passing that through to a client and then we’re adding services to that vessel.

So we make a good margin in terms of the added services, but the pass through of that cost of the vessel virtually goes at a near or a very small margin. So when the boat is out and working, you’ll see an increase in our revenue, but not attached to the margin. We’ll get the margin that comes through through the project deliverables we have. I think the other thing with that business is actually we got a lot of cash upfront. So it will have an impact in terms of working capital.

And I think if we’ve got material cash we’re sitting on at the end of the quarter, because of that, we’ll just disclose what that cash is at the time. Turning then to the, I guess, the abbreviated statements from the income statement, revenue is up 27, costs are up operating costs are up 32%. That’s Ross Offshore coming in, so structurally lower margin business. The driver is in terms of revenue growth is obviously Ross, but underlying that the Longitude business has had a good quarter, so up 31%. That gives us an EBIT of $2,400,000 You see down below the adjustments we have in terms of our EBIT.

So the restructuring costs, the OWC business as part of taking out costs, it’s also exited the hydrogen consultancy business. So we’ve taken the cost of that out because it’s non recurring. M and A costs we provide under IFRS under the operating costs, but we take those out because they’re non recurring. And then the amortization of PPA intangibles goes through the business and we adjust that in terms of our EBIT as we have done before. So that gives us 3,100,000.0 in terms of EBIT during the quarter and as I said 3.6% in terms of margin.

In terms of the cash flow, so our profit for tax at $3,100,000 adjusting for FX, working capital and the non cash items gives us a reasonably strong cash flow position of $5,900,000 during the quarter from an operating perspective. Cash going out the business, so from investing $1,400,000 going out there in terms of ongoing CapEx projects, but also the conclusion of the Hydra Mod acquisition, which we paid for in Q4. And then from a financing perspective, largely the outflow to shareholders, so 5,200,000.0 in terms of distribution to shareholders coming in the form of 4,900,000.0 in terms of the dividend payment and the remainder in terms of buyback of shares during the quarter. That gives us a net cash outflow during the quarter of CHF 1,900,000.0 and after adjusting for FX, we’re at CHF 19,500,000.0 cash at the end of the quarter. And then from a balance sheet perspective, not that many movements.

We start at $19,500,000 cash. Short term borrowings to the RCF facility we have, no drawings on that during the quarter. So that stays the same at $14,600,000 to give us the $4,800,000 of net cash we have. In terms of working capital, the calculation basis here, just to remind you, we’re making a comparison back to one quarter of revenue, whereas historically, we’ve done the average of the last two quarters. We’ve made that change because of the number of transactions we have.

It gives a quicker reflection in terms of the impact of the M and A businesses coming into the ABL Group. We ended at 40% Q4 in terms of the working capital ratio. We still have 30% to 40% in terms of our guidance, but also with the Marine Operations business that can get give some variability in that number. And then finally from me in terms of the dividend payment, as Ruben mentioned, the Board decided to recommend 0.45p per share for the first half of twenty twenty five, which will equate to 5,300,000.0 in terms of dividend payment out to shareholders to be approved at the AGM on the May 28. And this will actually be in the form of a repayment of Payvian capital rather than a straight distribution.

And in terms of finishing 2024, over the year, we paid at 0.8p per share over the period, which equates to 9,700,000.0 of distribution to shareholders. With that, I’ll pass you back to Ruben to take us through the outlook.

Ruben Siegel, Group CEO, ABL Group: Thank you. Firstly, for people online, if you have any questions, sorry, I should have mentioned this earlier, please put your questions in the chat room and we will answer them at the end. So just before I get into the outlook, let’s talk a little bit about the operation as well because you’ve seen the slight margin decline across ABL and like I said, maybe we should have taken some actions earlier. We’ll be not perfect in everything that we did, but we have taken actions. And like I said, with the dividend that we’re now forecasting for 2025, subject to the AGM, we believe in what we’ve done.

We believe in the operations that we have. We believe in the changes that we’ve taken. What you see here, we continue to increase the headcount year on year, quarter on quarter within ABL segment. Yet at the same time, we did have some decline in the utilization and hence why we had the decline in the EBIT in Q4. But we have taken the right actions.

We see that the way the market is going. We’re going to talk about the market in a moment and I think what we’re doing is the right way ahead. If you look in OWC, you will see a decrease in the headcount but that also includes the operation Golden Eagle which is our onshore technical due diligence in The Americas where we did increase the headcount. But the net effect is still a reduction in headcount and that’s because we continue to make the change in OWC. If you saw on the numbers, the actual revenue is down by close to $2,000,000 1 million dollars year on year yet the EBIT is flat year on year.

So we continue to make these changes. The question was did we take them early enough? The answer is probably no. We should have taken some of these actions earlier. We hold our hands up to that, but the actions we’ve taken, we hope to see some of that coming through very early and we’ll talk about that in a moment.

And the increase in AGR is predominantly through Ross Offshore and longitude is flat, although we will be bringing in proper marine in there as well. One other comment to make as well is about our use of freelancers. During this period, we tried to reduce the use of freelancers. That’s the ability that we have to try and take out these lumps and humps. It doesn’t look like there’s been a large decrease but actually the decrease is bigger than you think because they’re bringing in a Bross offshore brings in a lot more freelancer base.

So if you take the net effect, the pro form a, there’s actually a reasonable reduction in our freelancer usage during Q4. So how does things look going forward? There’s a lot of mixed discussion about renewables, in particular a lot of mixed discussion about offshore wind. Where is it going? OWC is was very focused in offshore wind.

We’ve tried to divest away from that and try to put more into onshore wind, solar, battery and other type of renewable energies and we continue that push. But the offshore wind is still there. There are some very good bright spots. If you look at the level of bidding that we’ve had over the last four or five months, there is a big increase in the bidding. If you look at our win rates, there’s a big increase in the win rates which will go into 2025.

If you remember, we talked about slipping this into the back end of 2025 and at the moment, we believe that that was how it will continue. And as I said, if you just look at the win rates, if you look at our bidding rates, it kind of suggests that. Remember offshore wind is not only about the European sector, it is also across Asia, it’s down in South America and so on. So it’s a mixed bag. The graph still show the same thing.

The long term is still the same thing. ABL is here for the long term. OWC is here for the long term and we believe in what we’re doing is the right way ahead. And like I said, we are starting to see some light at the end of the tunnel in offshore wind. But if you look into oil and gas, that’s also been a bit of a mixed bag over 2024.

We monitor both CapEx and OpEx spending. In particular, we look at the rig counts and the rig fleet utilization. There is a decline in the rig fleet utilization. At one point at the end of last year, middle of last year, everything was going rock and roll in the rig related activity and then all of a sudden you saw Aramco (TADAWUL:2222) drop some of their rigs and then a further drop in rigs and so on. But those rigs have been redistributed.

They’ve gone into Asia, some of them have gone to West Africa, it’s even gone down to Brazil. So the activity is there, it shows a small decline, in terms of the floater side of the business relatively flat, but overall the business is still very healthy going forward. And I’m listening to other stories around the globe of how you see the rig utilizations and it looks quite steady going into 2025. And the same on the spending as well. There’s still a lot of projects which are in flow at the moment.

There’s some new projects going on in other parts of the globe, Australia is still very strong, Brazil is still very strong, the North Sea here in Norway is very strong. So we still see the outlook as very being very positive and the oil and gas side of the business going into 2025. So just to wrap up in a summary, it was a bit of a mixed bag. I think 2024 for ABL Group was a mixed bag between a very volatile oil and gas market, between a decline in the offshore wind market, we had to take change. We had to at times put the brakes on and make those changes and we have done that.

The question is did we do it early enough? The answer is probably no. But we’ve made those changes and we continue to make those changes to get our EBIT and our EBIT margin up. We’ve had an increase from Q3 over Q2, Q4 over Q3 and we go and we’re very positive with the way things are going into 2025. I think with the fact that we’ve announced the dividend subject to the AGM being an increase next year tells you how we believe in our operations and how we believe in the market.

The renewable market is still not through all the downturn yet. There is still a lot of things to be done particularly in the offshore wind space, but we are seeing fruit coming through. And the Oil and Gas space just continues whether that would be in Australia or Brazil or The Middle East, we’re still seeing good action. So a lot of things that we need to do, we’re going to integrate Hydramod, one of our acquisitions last year, we’re going to integrate Papa Marine, we’re going to close and then integrate Techconsult and we continue to look for acquisitions. We continue to look for the ability to buy more companies.

One of the other actions which is not on here was that actually the last three or four acquisitions, we’ve actually funded with our own cash. We haven’t gone out to the market, we haven’t raised additional funding, we’ve used our own cash which is different than where we were a couple of years ago where we were going out to get that funding. So, mix back for 2024, mix back for Q4, but there is improvement and we continue to see the signs of that improvement going into 2025. So that’s how we’ll end. I don’t know if there’s any questions online or questions from the room, but thank you very much for your attention this morning.

Moderator: We can start with questions online. So could you provide some more color on the relatively weak margin in the ABL segment?

Ruben Siegel, Group CEO, ABL Group: So that was these actions which maybe we should have taken. The oil and gas market is a good market, it’s a strong market, it’s a positive market, but it’s had its ups and downs. Like I said, you had Saudi Arabia looks like the rock star and then boom 30 odd rigs go out the market. So we recruited and we continue to recruit. You see the headcount continue to recruit in Q3, Q4, Q2 every quarter we continue to increase that headcount for the market that we see and saw ahead.

But at the same time there were some moving of rigs, some of the projects went a little bit to the right and that immediately started to see a downturn in our utilizations. A downturn of 4%, five % in our utilization makes a big impact on EBIT. So it’s a mix between we continue to recruit and then we saw a decrease in our utilization. Now we’ve had to make that change going into 2025 to get that utilization back up again. So the action, should we have recruited as fast as we did?

Should we continue that recruitment in line of how we saw the market? I think the answer is yes. The question still is, you know, should we recruit as fast? We got to get the utilization back up again. And that’s the reason why we had the decrease in the EBIT of ABL.

Moderator: The next one, ABL has been on a steady decline in terms of EBIT in the last four quarters. Is this a trend?

Ruben Siegel, Group CEO, ABL Group: Well, it looks like a trend, obviously. But again, like I said, if we had not done that recruitment, the EBIT actually the margin in particular would have gone up and the EBIT would have gone up. We had brought on more headcount to take what we believe is the market. If I look at the we don’t break it down here, but if I look at the segments, the regions of ABL, ABL Asia is doing very, very well. ABL in Middle East is doing very, very well.

ABL in Europe has been quite steady, but we have seen a decline across The Americas and then we’ve been impacted as well by the bad debt provision in The Americas also. So it’s not a decline of ABL. I won’t say that and I won’t say that there is a decline in ABL overall. What I will say is there’s been peaks and troughs in the regions of ABL and we’re having to deal with that, make those changes, those changes are being implemented now. So it’s not a trend, it looks like a trend, but it’s, it’s not.

And we are doing the right things to fix it to get our utilizations back up and to get our EBIT back up. And we will put a lot of focus on that going into 2025.

Moderator: You have done a string of acquisitions over the last few years. Revenues and share counts are increasing, but net profits are falling. Is there something wrong with the operational model?

Ruben Siegel, Group CEO, ABL Group: No. We wouldn’t do the acquisitions if we didn’t think it was good for our model. We need to take away if you look at what we do, when we buy an acquisition, why do we do it? We do it because we want to strengthen our position in a particular market. We want to strengthen our position in a particular region.

So if you look at the acquisition of proper marine into Longitude, we continue to strengthen Longitude. If you look at the acquisition of Ross Offshore into AGR, it strengthens AGR’s position. But any acquisition you do takes time. It’s not you flick a switch, you get acquisition, you get the EBIT, all is great. It takes time.

You’ve got to integrate a company. You’ve got to integrate the cultures of a company. So you will see that coming through. We’ve done three or four acquisitions in the last twelve months. But we’ve made the right acquisitions to continue to grow our business.

But at the same time, we were recruiting people organically. You have the organic growth and you have the inorganic growth and maybe we recruited too fast, maybe we recruited too hard and that’s impacted our EBIT and that’s down to our performance and that’s down to us to make those changes. Myself and the management of ABL Group will continue to make those changes to get our EBIT back up. But the acquisitions we’re doing are the right acquisitions to really put our footprint in the sand for whatever it is that we do whether or not that’s in the AGR segment or engineering segment, we will continue to do it, but we need to continue to monitor our utilizations as well.

Moderator: I think we have covered the questions online, so we can open up for questions from the audience.

Audience Questioner: I can start. It sounds like you’re more optimistic to the offshore wind market now, and you reaffirm the view of a market upturn in in the second half of twenty twenty five. How should we think about the OWC, margin going forward through the, through the year?

Ruben Siegel, Group CEO, ABL Group: So we’ve set the targets and tell you exactly what that target is, but we’ve set a target. It is not zero. It is not to be loss making. It is not to be in the single low digits. That’s not what we want as an organization.

We’ve had to make the change. We’ve had to remove we’ve had to remove people from the organization. I’m not sure yet that offshore wind has flick switch and back on the way up But we have been better at the way we do our business. But there is light at the end of the tunnel offshore wind. If you look at the bidding, the bidding, there’s a big ramp up in bidding.

There’s a big ramp up in our win rate. So I don’t think offshore wind is still is out of it. I think they’ve hit the bottom. I think we’re starting to see offshore wind come out of where they were. It’s the first major downturn in offshore wind ever.

Solar has been through it, onshore wind has been through it, but offshore wind has never been through it. So this is offshore wind coming out and fixing themselves. That’s not only for OWC but for the offshore wind market generally. So I think it is better. I still believe that the second half of the year, we will see some improvement but I see our own winning and I see our own bidding.

That’s how I can gauge it not necessarily on the results. The results are the action of us reducing headcounts or increasing utilization, but going forward is what’s going forward is important and the win rate that we have and the bidding that we have shows an improvement. So that’s why we’re more positive about it. So it’s not to be running at zero, it’s not to be running at low single digit EBIT. That is not the plan of this company, but we need to make those adjustments to get to where we want to be, but it’s not where it is now.

So without guiding you, which I’m not prepared to do yet, we need to see more improvement and we’ll continue to make the changes.

Audience Questioner: One final one from from me. And and going off the OWC, question, you have taken measures in cutting costs and reducing headcount. Can you elaborate a little bit more about what cost measures you’ve implemented and are trying to implement?

Ruben Siegel, Group CEO, ABL Group: It’s not one. I mean, there’s so many. We’re across what 44, 40 five countries now. So there’s a lot of things that you can do. First of all, the main one is utilization.

We’ve got to get our utilization up. That’s the key to this. It’s there’s a lot of cost saving measures that we can take, the way we can be more efficient with the way we use our time. Obviously, there’s travel costs. There’s a lot of different costs that you can do that we want to try and clean up, you know, going to conferences, flights, and so on, use our network better.

The main cost saving is to reduce some of that headcount and get us more utilized. It’s all about the utilization. 1% utilization makes a huge difference for this company. So, we’ve got to get this utilization up and that’s the change that we’re making right now. We’ve started making it in q three, made more changes in q four, we’ll continue to make in q one, but that’s the main thing and the question is should we start it earlier?

And I think we have to put our hands up as a management and say that we didn’t take the change quick enough. But we’re doing it now. We started it in Q3, we’re doing more in Q4 but other cost saving measures are there as well. Travel, general overhead, systems, HR, IT, all the other things which are there just to keep cleaning up that cost. And even when you acquire a company, you merge offices.

I don’t know how many legal entities this company has, hundreds of legal entities as we continue to buy companies. You’ve got to clean up this. Every legal entity has audit fees. Every legal entity has finance fees and bank accounts. Got to keep cleaning them up, reduce this overhead within the organization and that’s happening as well at the moment.

Audience Questioner: Yes. You seem to pay pretty good price for this to have positions. I mean, what will you do going forward? Is there a lot of cost to be taken out?

Ruben Siegel, Group CEO, ABL Group: So proper marine in Brazil is standalone in Brazil. It is going to be integrated into Longitude. We can’t bring the two offices together. It’s not possible. If you look at proper marine’s office, I mean, in terms of integrating them, it’s not that we can get one big office overnight.

That’s not going to happen. So I’m not sure there’s a lot of cost savings necessarily proper with proper marine. Yes, they’ll come onto our IT system. Yes, they will come into our ERP system and so on, but there won’t be a lot of cost savings in proper marine. The main thing for proper marine is can you use them for the work we do in Singapore and Asia and deliver it in Brazil.

That’s what we’re gonna get out of proper marine. Although I have to say they’re very busy with the phone, they have their own backlog and utilization is actually very, very good in proper marine. So I don’t know how much capacity they will have. The question is, can we grow proper marine in Brazil to help the rest of Longitude? That’s the plan for them.

If you look at Tech Consult, they’re in Bergen, we’re in Bergen, there’ll be some cost savings of bringing offices together, but not a lot. The main thing for Tech Consult is to bring the databases. I think they have a database of sixteen, seventeen thousand people and when we merge the two databases, we’ll have over 23,000 people in the database. So it’s not necessarily cost savings when we get tech consult. It’s more about how can we grow the business, the revenues, and the EBIT we’re bringing on tech consults.

So each one has a different a different thing. Some of them you can get more cost savings, some of them you get more synergy working together. I think in these cases, it’s more about the revenue synergies than the cost savings bringing them that’s what I think, but won’t stop us from trying to reduce costs. We’ll do that as well as we if we can, but I think they’re limited in both cases.

Audience Questioner: And in terms of the overall margin, I mean, if you mentioned or you did mention, you know, not low single digit target for OWC and at the same time, 6.5% operating margin over the cycle, right? I mean, can you put any sort of timeline here for that? I mean

Ruben Siegel, Group CEO, ABL Group: Yeah. I mean, it’s interesting. Just watching January as an example, Stuart talked about the lumpiness of the boat. So this boat brings on a lower revenue and very, very little margin. So it’s something that we’re going to have to figure out as we keep presenting these figures to you.

And obviously, Ross is a structurally different business than ABL. You know, ABL should be back into the twenties. That’s where they were, but Ross is not gonna be in 20%. That’s not not going to happen. AGR is not going to get to 20% EBIT margins.

I think AGR and and Ross together right now are actually doing quite well. And if you remove the boat out of the numbers, that business is is is actually very good. If you look at when we bought them, they were down in the 3% margin, 4%. They’re now running at seven and if you move the boat, it’s even higher. So I think that’s doing doing quite well.

Longitude goes up and down. One minute is 35%, next minute is 10, But it’s it’s a good business. It’s a very solid business and we’re gonna try and remove some of these peaks and troughs by expanding longitude. The ABL one is the one. Right now, it’s down in in fifteen, sixteen.

It needs to get back to 20. And I think when you combine all these business together and, of course, OWC has been running at zero, that’s in the loss making. And if we can get that back to where it needs to be, even the high single digit numbers, we’ll get back to those numbers. You know, we’ve said six and I think six and a half is what we guided, correct, six and a half through the cycle. We still believe that.

But a lot of that, of course, now with AGR becoming the largest single revenue generator in the company, that brings the overall margin down. But, there’s no reason why we can’t get this company back to where it needs to be with those four segments where they used to be. But we need to make the change keep making the change. I think you look out the window, you’ve seen you see the renewables and the offshore wind space growing really down and you see oil and gas really, you’re not quite sure what’s happening day by day whether or not you’re in Brazil or Australia. Our job is to keep monitoring this, make the changes within the organization to get our margins back up.

That’s what we will aim on during 2025. Any other questions? No? Okay. Then we will stop there.

Thank you very much everyone and I look forward to seeing you all again in a few months’ time. Thank you.

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